The global consumer packaged coffee market has grown noticeably in recent years. It is forecast to grow further as demand for single serve solutions and premium products grows. This makes it attractive to fast moving consumer goods companies eager to be active across the product spectrum. In no case has this been more apparent than with Nestlé.

Features and benefits

This case study analyzes how Nestlé has become a major player in the consumer packaged coffee market.

This case study examines the market segmentation strategies Nestlé is adopting to secure a position as undisputed market leader.

This case study looks at Nestlé's competition and how it is seeking to gain a competitive advantage in the consumer packaged coffee market

Highlights

There is a wide range of coffee products available, designed to cater for all budgets and tastes. Each area of the market has its target demographic and all are lucrative. Nestlé has employed market segmentation strategies and product differentiation to launch a range of products which allow it to capture a share of every coffee sub-market.

Nestlé’s offering at the lower, instant end of the market revolves around the Nescafé brand. In order to grow the brand, Nestlé has employed market segmentation and product differentiation strategies which have proved successful. The company is a leading player in this sector but faces competition from the likes of Mondelez and Douwe Egberts.

Nestlé services the high end of the coffee market through its Nespresso brand. Nestlé harnesses the power of pod convenience but marries it with coffee quality, design and marketing that grant the Nespresso brand an air of exclusivity as it seeks to capture top-end consumers.

Your key questions answered

Who are the market leaders in the global consumer packaged coffee market?

How does Nestlé use market segmentation techniques to cement its position in the coffee market?

How does Nestlé compete with major rivals such as Mondelez and Douwe Egberts?

How is single serve coffee revolutionizing the market?

OVERVIEWCatalystSummary

THE GLOBAL COFFEE MARKETThe global coffee market grew between 2008 and 2012Both the roast and instant coffee segments remain lucrativeNestle is the number two by volume market shareNestle is not satisfied with being the number two player

NESTLE’S LOW-END OFFERINGThe Nescafe brand: Success varies from country to countryThe company employs market segmentation strategies to maximize its marketThe company’s low-end offering is not limited to Nescafe

NESTLE’S MID-RANGE OFFERINGDouwe Egberts and Philips blazed a trail with the SenseoKraft was next on the scene with its Tassimo line of machinesNestle was late to market with its Dolce Gusto machinesRivalry in the mid-range coffee market is intenseThere is evidence of market segmentation with the machines

NESTLE’S HIGH-END OFFERINGNespresso is not a new phenomenonNespresso uses only very select coffee in its podsNespresso positions itself as an exclusive, high-end brandThis positioning allows Nespresso to charge a premiumNespresso machines are also sold at a premium

CONCLUSIONSMarket segmentation has made Nestle a major player in the global coffee market